Honeywell Inc.'s plastics unit is battling overcapacity in the nylon compounding sector with new grades of nanocomposite-based materials and a quicker pace in getting new materials out to customers.
Two additional nanocomposite-based grades of Honeywell's nylon 6 resin should be available in the extruded film market by mid-2003, officials said in recent interviews at Honeywell headquarters in Morristown. The grades could help Honeywell make strides in the film market and partially offset a challenging automotive sector.
Nylon film has grown in acceptance as film extrusion firms develop more complicated products, making nine- and 11-layer coextrusion almost as common as five- and seven-layer work, according to Honeywell Plastics global marketing director Lance Altizer.
``The real benefit is that nylon holds these films together because of its strength,'' Altizer said. ``It also offers greater shelf-life and resealability in stand-up pouches and cereal bags. Nylon provides material savings as well as savings in space-on-shelf.''
Nylon growth in film markets could reach 15 percent in 2002 and could hit that same level in 2003, officials said.
The grades that are to be launched next year - under Honeywell's Aegis brand - can be used to improve barrier properties in PET bottles.
Overcapacity among independent nylon compounders also remains an issue because of its impact on nylon profitability. Even if the nylon resin market is balanced, Altizer said excess compounding capacity makes it difficult to raise prices and improve margins.
In recent years, a number of foreign compounders - including Lati Industria Termoplastici SpA, Radici Group and Rhodia SA - have entered the North American market.
The situation has led Honeywell to fast-track a number of research projects. Some materials now can be developed and commercialized in less than a year, Altizer said.
``The thing with compounding is that there's a low barrier to entry,'' he said. ``It's easy for anyone to get into the game with a 30 percent glass-filled grade. That's why we need to focus on our own products.''
Honeywell also is optimistic about growing nylon into wire and cable, electrical/electronic and building and construction markets, according to market segment leader Walt Viola.
In electrical/electronic, Honeywell has seen some recent conversion to nylon from polycarbonate, Viola said. Business also has picked up in power-tool housings and handles and in parts for small engines such as those used in riding mowers.
Like a number of resin makers, Honeywell has been fine-tuning its research and development efforts to suit specific markets. That work has yielded nylon grades that can handle glass content as high as 63 percent in metal-replacement uses, according to plastics product development leader Steve Hanley.
``We've always had a good customer link, but it seems customers now are depending more and more on the resin supplier for product innovation,'' Hanley said.
``We've historically been involved in all areas of product development,'' added global commercial technology director Mark Minnichelli. ``And we've been able to keep our percentage of R&D spending vs. sales the same. But gone are the days of broad-scale resin development that could be applied to all markets.''
Automotive always looms large in nylon, although Honeywell does only one-third of its nylon business there, as opposed to the industry average of 40 percent. Recently some automotive fans have reverted to nylon from polypropylene, Viola said, with business in exterior door handles and mirrors remaining solid.
The challenge for Honeywell and other auto material makers has been to retain their business in the face of requests by original equipment manufacturers to make parts using as little material as possible, he added.
On the capacity front, Altizer said Honeywell is well-supplied in North America with nylon resin capacity in Columbia, S.C., and Chesterfield, Va., and with nylon compounding capacity in Chesterfield and Sparta, Tenn.
Demand for its recycled nylon and PET resins - made in Chesterfield and Sparta - is on the rise, but there are no plans to add capacity for those products in 2003.
Although Honeywell plastics officials said their sales have been up so far in 2002, sales in the firm's specialty materials unit - which includes plastics, waxes, fibers and other products - were down 5 percent to about $2.4 billion in the first nine months of the year. Specialty materials profit dropped 9 percent to $52 million in that period as well.